Spend Management Goes Upstream (Part 4 — The aPriori Philosophy)

When it comes to getting better costing information into the hands of design engineers, information exchange is not just a one-way street. Indeed, discrete manufacturers must bridge the functional gaps -- in both directions -- that tie together the entire product development and delivery process. aPriori, a software provider focused on building this specific bridge, thinks it has just the ticket to make this possible. They bill their cost management solution as an "enterprise cost management software platform" which enables discrete and product manufacturing companies to significantly reduce costs and improve margins by accurately measuring, controlling and reducing costs of good sold (COGs).

Without question, this is not easy task. But having a defined starting point is a critical step in creating a shared view into product cost. aPriori's solution begins this process by first collecting the specific cost characteristics of an individual part, assembly or product from CAD data, and then uses what they describe as "Purpose Driven Geometry Assessment" to arrive at "Geometric Cost Drivers" from the CAD model itself. This is done automatically in seconds, without any work on the user’s part.

Users -- whether they're designers, sourcing professionals, or manufacturing engineers -- can then enter other "Non Geometric Cost Drivers" into the application. These might include production volumes, batch size, process routings, machine specifications, and supplier details. Or they can let the application determine reasonable assumptions for these choices. aPriori's philosophy behind this approach is to "serve all communities that impact and manage cost, regardless of a user's specific level of cost knowledge." And the solution does this in an active manner, generating cost data in a predictive way at any point in the product development cycle whenever it is needed.

What separates out aPriori's approach from others in the market is their process-based approach to their cost modeling (versus other models which rely on historical costing and statistical analysis). By relying on what they describe as "mechanistic process-based models" to drive costing analysis, aPriori incorporates not only information about parts, but also the manufacturing process required to create and deliver them. One of the benefits of this approach is that it is easily extensible to a broad set of parts and components within the manufacturing process, regardless of design.

Without question, the aPriori costing philosophy is relatively straightforward to understand, and is one that should generate interest not only in the design community, but the sourcing one as well. Whether it crosses the chasm and reaches a broader audience outside of early adopters, however, remains to be seen. But I'd bet that their success will be a bellwether indicator for the adoption of cost modeling technology in the Spend Management manufacturing world at large.